Landscaping Business Financing
It is obvious based on the booming landscaping business industry that American’s really love their yards, as well as believing that a well-maintained yard is incredibly important. With a growing concern for the state of our environment, as well as the importance of being outside and the health impacts it has, American’s are valuing their yards more and more. In this article we will look at the landscaping and gardening industry, as well as the financing solutions available to small landscaping companies.
Landscaping and Gardening Industry Data
According to a new survey by Harris Poll for the National Association of Landscape Professionals that was conducted among 2,034 United States adults (over the age of 18), three quarters of Americans today (75 percent) feel that it is important to spend time outside in their yards. This study also found that despite the perception that younger generations are focused on high-tech lifestyles, 74% of young adults think spending time outside in their yards is incredibly important. Also, 83 percent of Americans think having a yard in general is important, with 90 percent of those people with a yard think it is important that it is well maintained. In conjunctions with these overwhelming numbers, (LINK2)A recent landscaping and gardening industry report shows that most Americans want access to green spaces. “52 percent is the share of urban respondents globally in this year’s survey who identified ‘green areas’ as a feature they would like to see more of in their cities, making it the most frequently mentioned feature”.
Landscaping and Gardening Industry Trends
Over the past five years, the landscaping industry has seen incredible growth in the domestic housing and property sectors; this is leading to a higher demand for landscaping services across the board. As of this year, commercial landscaping accounts for over 50 percent of the landscaping industries revenue, while residential landscaping services makes up around 30 percent of the landscaping industries revenue. The growing and constantly improving economy is leading to consumers having more disposable income, contributing to the greater demand for landscaping services. With the growing demand for landscaping services, there is an expected annualized rate of growth of 2.8 percent to the overall economy in the upcoming years. These increasing statistics are also contributing to the rapid boost in construction activity and investment in household maintenance, thus allowing landscaping business to raise prices – while the consumer might not like this, it is a great sign for all landscaping companies, especially because of the recent studies showing that landscaping services are in high demand. (LINK4)Landscaping businesses are seeing 63 percent of all landscaping businesses charging more for services now than in the past few years.
While the landscaping industry as a whole has seen skyrocketing capital and high demand for work, there is a major issue affecting landscaping companies across the board – labor shortages. There is a major labor crisis being experienced from all landscaping companies today, predominately due to new government pressures on immigrant workers.
Why Would a Landscaping Company Need Financing?
- Payroll expenses and hiring employees are unavoidable in most businesses, but with the growing demand for more qualified landscapers, the cost of keeping skilled and trained employees is rising. The landscape industry contributes over 30 percent of their revenue to wages. In this incredibly competitive market, landscaping businesses are focusing on staying on top through the quality of the services they provide, which means landscaping business owners are being hyper aware of the employees they are choosing, thus leading to better pay wages for landscapers in this industry.
- Recruiting workings: one of the most successful ways landscaping companies are recruiting and retaining skilled landscapers is through incentives and rewards programs. (LINK5)Rewards for quality work, implementing small milestones instead of just long term goals among employees, having constant reviews with their employees assessing strengths and weaknesses, and accommodating to employees are all strategies that successful landscaping businesses have implemented.
- Technology: The landscaping industry is another industry that is being dominated by technology – if your landscaping business is not making the transition into the technology world, then chances of success are not high. Many landscaping companies are utilizing mobile devices for their businesses, opening doors to more opportunities for improved operations, communications, lead generations, and marketing. This has now become the number one tool that landscaping companies need to be investing in, which is why considering the different financing options available to your landscaping business are important.
- Social media and marketing are absolutely essential in today’s business; this generation relies heavily on having access to information from their peers and reviewing businesses through various forms of social media. Through the use of social media, landscaping businesses are solidifying their credibility, interacting more with customers, showcasing their work all over the internet, and gaining reviews through the various channels of social media.
- Capital expenses: A new generation of owners are now taking over landscaping businesses. What this means for businesses is that (LINK5)While the landscaping industry will see a huge shift in the next few years due to this change in ownership, it will also see these strategies becoming more and more expensive. Reviewing financing and loan options can help when looking to update your company and beat the competition.
- Fuel: With gas prices constantly fluctuating, many landscaping businesses worry about the prices of gasoline fuel. While some landscaping businesses have made the transition into propane or diesel fuel, there are still over half of landscaping businesses who have yet to make the transition. In conjunction with overwhelming fuel costs, supplying, replacing, and staying up to date on the necessary equipment needed to have a successful landscaping business can be incredibly expensive. Reviewing the different loan options for your landscaping business can help alleviate some of these overwhelming, but vital, costs.
Types of Landscaping Business Loans
|Bank||6-10%||3-7 years||14-30 days|
|SBA||6-10%||3-7 years||10-30 days|
|Line of Credit||5-15%||1 – 3 years||7-30 days|
|Alternative||6-25%||1-5 years||5-7 days|
|Cash Advance||1.16-1.55||3-24 months||1-3 days|
|Invoice Finance||1-2% weekly||1 – 90 days||1-3 days|
Landscaping Bank Loans
As always, the first and best option for financing any small business would be to obtain a landscaping term loan and/or a line-of-credit. Obtaining true bank-rate financing allows company’s to have affordable financing without having to waste profits on interest and fees.
- Rates: 5-10%
- Terms: 1-25 years
Landscaping SBA Loans
SBA landscaping company loans offer small businesses the opportunity to get bank-rate financing who normally wouldn’t qualify. The Small Business Administration seeks to increase lending to smaller firms by guaranteeing that SBA lender’s loans will be mostly covered by the government if the small business fails to repay the financing.
- Rates: 6-8%
- Terms: 3-25 years
Alternative Landscaping Business Loans
Alternative landscaping loans are the midpath between bank rate business loans, and very high interest cash advances or factoring. Unlike bank loans, an alternative loan is fairly easy to obtain if you have decent credit and your business is profitable.
- Rates: 8-25%
- Terms: 1-5 years
Landscaping Cash Advances
Cash advances for landscaping companies are the sale of the landscaping or gardening company’s future sales in return for an upfront amount of business cash. Cash advances repayments come through repayments through the business’s credit cards, or through a daily payment via bank account ach.
Documents needed for wholesale distribution cash advance:
- Bank statements and/or credit card statements